Ask HN: What do you nerds spend your money on?
I'm a Black man, in my late twenties, and I come from one of the poorest areas of New York City. To boot, I don't even have a college degree. I've been extremely lucky, and I'm ridiculously grateful, but I don't know how to manage what I'm making and how I should think about what I earn going forward. My parents and other close relatives can only speculate, and like many others in similar positions, I don't know who to trust with guiding my reality. So I'm curious: what do you do with your money, generally? Buy a lot of video games? Books? Courses? Food? Real estate? Stocks? How do you generally split up your expenses? Are you shocked at all by the money you're making? It sounds like a weird problem to have, and it's sorta embarrassing to ask, but I'm starting to feel overwhelmed by my growth.
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[ 3.5 ms ] story [ 185 ms ] threadIf you have cash beyond your rainy-day fund, you should just put it into some dumb ETFs, as Warren Buffett recommends[1]. Active investments are mostly gambling, but if you love the lifestyle involved in that gambling (as many of us entrepreneurs do) then even losing money might still lead to a fulfilling life.
You might also consider working toward saving enough that you can retire and live off the interest. People refer to this as financial independence and there are lots of communities[2] and tools to help people achieve it without inheriting wealth or betting on startups/stocks/etc.
1. https://www.fool.com/investing/2017/02/26/warren-buffett-jus...
2. https://www.reddit.com/r/financialindependence/
We also now have a housekeeper come to clean house once a month, which is SO nice because she does it better and (frankly, sadly) more often than we ever managed to on our own. I feel like a failed adult not being able to clean up after myself, but there's too much else to do in life, and we don't even have kids. All in all, that's $2500 really well spent considering what a tiny fraction it is of our dual income.
I would add: spend money on experiences, not stuff. Stuff just weighs you down.
Probably not the answer you were looking for...
(Advice: Make sure your maxing out any 401k match, then dump as much as you can into a Target Retirement 20XX account. Also, don't get married. Your future self will thank you.)
You don’t also do cohabitation without a palnup and similar acknowledgement as above, due to palimony.
And you never commingle finances except for common house expenses and the primary residence... keep both of your finances and everything else separate, for sanity’s sake.
Finally, if you want to avoid divorce rape, alimony, child-support and all that, then don’t get divorced in a community property state.
Can't imagine how much worse it could be for those with kids.
I think this is NOT good advice. Reasons:
* the more you invest in your 401(k), you reduce your tax bracket
* you can invest more money since its pre-tax. The caveat being here that you will be taxed when you withdraw. Usually its a worthy tradeoff
* you still have the option of directing your money in Vanguard or Vanguard like ETF's since you are in control of where your 401(k) money goes
IANAL so let me know if what I said is factually incorrect.
Reducing your tax bracket isn't meaningful separately from the next item; the idea that it is comes from a misunderstanding of progressive taxation.
> you can invest more money since its pre-tax. The caveat being here that you will be taxed when you withdraw. Usually its a worthy tradeoff
For most people, yes (probably, though obviously this depends on future tax policy and other future events), but this is not universally the case.
> you still have the option of directing your money in Vanguard or Vanguard like ETF's since you are in control of where your 401(k) money goes
Depends on who your employer has managing the 401k and what they offer. This varies a lot.
You're supposed to have your emergency fund completely built up before you save for retirement.
It helped me put an appropriate amount of money into a 401k, and other investment accounts, while having a budget for what I can confidently spend on myself.
I just invest it, there is nothing that I want that I can afford. It's definitely nice to kind of not worry about starving though.
Instead I'm moving towards financial independence - hopefully to the point where I can retire early. I'm working on maxing out my 401k and IRA investments yearly. I keep a few months salary saved up so I can weather most storms without dipping into the retirement funds.
This is something I'm working towards. I'm a long way from meeting my goals of income:savings ratio. I spend too much on food and various forms of entertainment (PC games and movies).
My S/O works in the arts and she still finds it insane how much money I make (not a lot by the HN crowd, I'm sure), so she's the one that inspires me to do better things with my money.
There was a NYTimes article recently that is sortof on the topic: https://www.nytimes.com/2018/04/20/smarter-living/why-you-sh...
A good financial planner should be certified (have their CFP), and will offer your first visit completely for free.
I don't really have other expensive 'hobbies'. I don't eat out much, my wine clubs are very reasonable/modest ones, I'm not so much into motorcycles anymore, my carbon road bicycle is 10 years old, etc etc. I don't regularly buy new computers/electronics/etc, but when I do I buy something really nice and keep it for a decade. Not a gamer, not hugely into A/V stuff, etc.
I've made a ton of money -- and spent it. But I never could find anything to substitute for time.
I live where the cost of living is really low. I work a few months a year and then take the rest of the year to do what I want. It most always involves technology -- I'm a nerd like that -- but most importantly it involves self-directed learning. I learn stuff because I think it's important, not because my job requires it.
Bonus points for being home to watch my kids grow up, getting to know my neighbors, being able to take vacations for as long as I like. Extra bonus points for being grounded in a community that has nothing to do with technology -- as opposed to constantly worrying about whether I was in the cool kids club or not. I'm not, and that's fine.
It's true. We make a lot of money. Time is the one thing you can't buy. Nobody ever got to be 80 and complained about spending too much time with their family, but plenty of folks are sorry they were absent workaholics for so long.
Also somewhat related, I tend to not mind spending more money for things I spend a lot of time with. For instance, a fast computer, a comfortable chair and mattress, great sounding speakers/headphones/earphones, etc, etc, are all things I've splurged on, despite being relatively frugal with most other aspects of my life.
- I live in a studio apartment in downtown San Francisco so I can minimize my commute (currently a 10 minute walk). San Francisco is a notoriously expensive city. However, most engineers in similar situations as myself (single, with slightly above market rate salary) can afford to close to work, but many end up choosing not to because they want to save more money on rent. I too could probably save a good $1000 more per month if I chose to live somewhere outside downtown and commute to work, but for me that's a small price to pay to get 5+ hours per week of my life back.
- Ordering food instead of cooking. I cooked my own meals a lot in college. It was definitely significantly cheaper than having meals at restaurants, but it was also ridiculously time consuming, especially when you take into account things like learning new dishes and grocery shopping. These days I almost exclusively order food for pickup when I leave work and for delivery on weekends. I also have a few boxes of Soylent stocked up for when I don't feel any craving for any particular taste. I also had an Amazon Fresh subscription for groceries for a while when I was transitioning between my cooking and ordering phases, so that could be a decent compromise if you still want to cook but are looking to save time off grocery shopping.
- Buying your own exercise equipment instead of going to the gym. Having a treadmill at home not only saved me commute time to and from the gym, it also had the nice side effect of reducing the activation energy for actually exercising, so I end up doing it much more often now because it's so easy to get started. I also don't have to feel self conscious sweating it out in a room full of other people, and I have my own private shower a few steps away to refresh myself when done. This one also happens to be a money saver in the long run because the treadmill pays for itself in gym membership fees saved.
These might not be practical for everybody, but I hope that was at least helpful as a starting point for brainstorming things that could work for you.
live in a neighborhood, especially if possible live in a walk-able mixed use neighborhood close to work, OP might live in NYC so maybe he's got this covered.
I estimate your quality of life is very high compared the people in most of America who spend their days stuck in traffic.
Gyms are a nice way to get out of the house and mingle in the neighborhood, so not sure about the home gym.
I remember reading in the NYT about some very successful actor who they profiled on a Saturday, what did he do with his time / money? Got a coffee, walked his dog down to the wharf, planned on reading a book later. Or what does Andrew Ng like to do on his days off with all his money, according to the article I read, stay home and read a book. Its funny how after a certain level people don't have much to buy unless they take up something like yachting or car racing.
If you do invest (and it's a good idea), make sure to account for liquidity requirements.
For example, most people don't realize that if a substantial portion of their wealth has equity exposure and the market experiences a correction, their money is effectively illiquid (because selling at or near the trough would be foolish). You don't want to be caught in this situation while simultaneously having to pay for a wedding/car/home downpayment/initialization capital for a business.
So, think ahead about your anticipated liquidity requirements when you decide how you're going to invest. And always assume you have no idea what the market is going to do.
By the way, the correlation between most asset classes and the broader market skyrockets during corrections. In other words, most asset classes you might have exposure to will also dip during a downturn. Keep this in mind when deciding how to structure your allocations.
Personally, my purchases fall into a handful of categories:
- Inexpensive, non-recurring (or infrequent): books, classes/meetups, clothes, one-off trips, etc
- Inexpensive, recurring: subscriptions (Netflix, Spotify, HBOGo, Amazon Prime), coffee, the marginal cost of higher quality food and usually pre-prepared, vitamins, cleaning service, and some other things that improve wellbeing or buy back my time
- Expensive, recurring: rent
- Expensive, non-recurring: trips/vacations
I generally don't worry too much about the 'Inexpensive' categories because they're typically not worth adjusting. If you ever do a comprehensive financial self-assessment, you'll see that being pennywise is a losing game just based on the numbers and therefore not even worth the stress/extra effort. Just don't be unreasonably penny foolish and you're fine. In my case, I don't drink and I don't really like expensive meals, so I save a lot of money right there.
I try to keep my rent as low as possible. That's the easiest thing to optimize. Having a smaller space is actually useful as it forces you to be outside more often.
I almost never balk at spending on experiences or trips; in fact, I consider those the best expenditures by far.
I do not (and probably will not for the foreseeable future) have a car, a mortgage, or a wedding (not planning to get married any time soon; have decided it's worth delaying in my case).
Two things in the next 3-5 years I might need money for: initialization capital for a business (if a side hustle matures) and backpacking/traveling expenses. I'm hoping to go off for at least 3-6 months at some point in the next 2-3 years.
Savings and investment rate is above $50K per year. I usually go 40% in the market and 60% high yield savings + bonds. That's on the low side because I anticipate needing cash on hand in the next 3-5 years.
And consider putting that money to good use -- improving the world, or rewarding people who are doing good work but not well compensated for it, or creating opportunities for other not-yet-wealthy people to have a chance at a good shot in life.
Oh, and I agree, except I recommend plain index funds. I got worse at investing after the degree/cfa/series 7/63.
I have a wife and children, we have everything we need, most things that we want, nothing spectacular (sensible, yet very nice, vehicles, bicycles, home with interior upgrades, extra amenities, etc) - our taste is fairly plain. We take a vacation with family every year to save money there.
I guess the point is, live comfortably, get the extra stuff, sensibly, but save. Because you just never know.
Accumulation of wealth beyond the reasonable needs of yourself and dependents is pointless.
Full disclosure I don't have the income for this yet so I can't offer experience just opinion.
I don't want to work until I'm 65. I'd rather work hard now, and be aggressive or "greedy" about my salary, so that I can retire earlier and fund things for my future family. That's the point of accumulation of wealth.
I started (back in the 1980s) with a 2-3% savings rate at first. As I found ways to economize, I could save more. And as I got raises, I tried to save most of each raise. After about 4-5 years, I was up to 20%.
The taxable part could be used for large expenses, like a car or down payment on a house. The tax-advantaged savings accumulated until I retired in 2016.
EDIT: During my working years, besides the usual family expenses, I bought books, lectures from the Great Courses, and a second master's degree. Now I have more time to make use of all of these.